The present embodiments relate to loan treatment. For example, whether to provide a mortgage or how to treat an existing mortgage is determined.
Credco has dominated the mortgage origination market by merging the outputs of three credit bureaus (Experian, Equifax and TransUnion). Credit information is used to determine credit scores. These scores are relied on to determine whether or the type of loan to provide. However, credit scores provide an over-simplified view of the borrower that may lead to distress for the borrower and/or default for the lender.
For loan modification, an over-simplified view of the borrower is also used. Presently, the industry views the distressed borrower as a homogenous entity, with simplistic drivers (e.g. “affordability) and an overly simple cause/effect paradigm: once a loan is more “affordable,” a borrower can service the loan successfully, avoid foreclosure and remain in his/her home. Given this paradigm, the industry generally treats loan modification as the most appropriate loss mitigation treatment. Loan modification is believed the most likely approach to rescue struggling borrowers and alleviate the financial distress of the mortgage holder. However, the borrower population is not simple and homogenous, but diverse and heterogeneous. A “one size fits all” treatment program, such as loan modification, may be overly simplistic.